New taxation “would benefit investors”

Discussion around the introduction of a ‘Tobin Tax’ is increasing.

The tax would benefit long term investors and increase transaction costs of short-term investors. This would bring more (systemic) stability to the markets.

The German and French governments are in favour, as is Bill Gates. The UK government wants London to opt out.

Given that the share of trades made off-exchange (in so-called ‘dark pools’) had been growing until August, as large asset managers sought to trade in these private exchanges that discourage high-speed trading, it seems there may be other supporters of the tax also.

Having said that, the share of business taking place in these ‘dark pools’ has fallen over the past month, due to the high volatility which means that the higher liquidity of the main markets is important — traders need to trade quickly before prices move further.

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